Charles Jones

Ptarmigan Capital is delighted to announce that Lord Charles Hemphill, Sir Laurie Magnus CBE, and Orlando Fraser CBE KC have joined its Advisory Board to provide strategic guidance and offer their industry expertise to the firm.

As a follow up to our piece “The Arithmetic of the AI Capex Boom", we have been working to understand if there are other factors which are supporting AI infrastructure share prices which may be more transient in nature. In the course of this work, we identified three factors which may be supporting current earnings and investor optimism, but which may not repeat going forward.

We have asked ourselves two connected questions and used simple “back of the envelope” calculations to test our position: 1) What would hyperscalers (and Oracle) need to charge for AI to earn a 15% return on the capex of the last three years and the next three years? 2) What portion of the labour force needs to be replaced to sustain current AI expectations?